Conservation International said that they had discovered eight new shrimp, 20 types of reef building coral and 24 species of fish including one called the flasher wrasse because of the bright colours the male exhibits during mating.
"It's one of the most stunningly beautiful landscapes and seascapes on the planet," said Mark Erdmann, a senior adviser for the group who led two surveys to the area earlier this year.
"Above and below water, it's simply mind blowing," he said.
The area - known as Bird's Head Seascape - contains even richer biodiversity than the Great Barrier Reef in Australia, according to Jatna Supriatna, executive director of Conservation International Indonesia.
Asia's "Coral Triangle" is home to more than 1,200 species of fish and almost 600 species of reef-building coral, or 75 per cent of the world's known total.
The group warned that the area - which stretches for 180,000 square km on the northwestern end of Papua province - is in danger from fishermen who use dynamite and cyanide to net their catches and called on Indonesia's government to do more to protect it.
"These Papuan reefs are literally species factories that require special attention to protect them from unsustainable fisheries and other threats so they can continue to benefit their local owners and the global community," Erdmann said.
A new shark which walks on its
fins was discovered by the group
Only 11 per cent of the area currently is protected, most of it in the Teluk Cendarawasih National Park. The government is studying the idea of creating additional marine parks.
Earlier this year the organisation announced the discovery of 20 frog species, four new butterfly species, and at least five new types of palms after an expedition to the virgin forests of Papua's Mamberamo area in December 2005.